1. “Analysis of Project Zodiac”
By John Frederick
August 15, 2006
FI 512 Case Study, Week 06
Part I: Enterprise Value:
The valuation method used in evaluating this company was the “enterprise valuation cash
flow expected for the current year” of 2003 estimates:
EBIT $605,203
Taxes 0 note: real estate taxes and payroll taxes were noticed but
were not added to the equation.
Net Income 605,203
Dep. 473,243
Changes in Working Capital
Required Cash 0
A/R ($692.8)
Inv. ($590.4)
A/P ($166.5)
Acc. Liab. ($111.4)
Net Changes in W.C. ($1561.1)
CapX 0
Unlevered FCF 1,078,446 - $1,561,100 = $482,654
The enterprise value for the company is $482,654. No projects were prepared for the
company because the company has a zero balance for operating cash and excess cash on
the balance sheet from 1999 to 2003, respectively.
Part II: Merits and Risks:
Merits: Experienced management team, Cyclical Recovery, and Substantial Local
Market Opportunity. This company is set in 2003 to improve over the years to come.
The perpetuity growth rate, using the gross national product, is 7.2% in the third quarter
of 2003. The PMI, Purchasing Managers Index, is 50.0 in July 2003.
Risks: The company’s financials between 2000 and 2002 were appearing to be going
down. However, in 2003, the company’s financial statements started to improve.
The valuation model used in the analysis can change due to changes in interest rates,
gross national product percentages, changes in the financial statements, managerial
decisions regarding operations, finance, and human resources.

2. FREDERICK 02
Part III: Additional Information:
1. Interested in knowing the corporate tax rate for this company. It was not included
in the income statement.
2. Interested in seeing the cash figures in the balance sheets, it was not included for
1999 to 2003.
3. Instead in knowing the net income for the business before making a decision to
buy the company. Knowing the net income helps in the valuation.